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STRATEGIA NEWS RELEASE-EARNINGS!!!!!
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Friday May 14, 11:03 am Eastern Time
Company Press Release
Strategia Corporation Announces 1999 First Quarter Results
LOUISVILLE, Ky.--(BUSINESS WIRE)--May 14, 1999--Strategia Corporation (AMEX:SAA - news) today announced results for the three months ended March 31, 1999.
Consolidated revenues increased 19% to $6.4 million in the quarter ended March 31, 1999, as compared to $5.4 million for 1998. Revenues were evenly divided between the U.S. operations and the French operations in the first quarter as Year 2000 revenues at Strategia Europe increased from less than $200 thousand in the first three months of 1998 to $1.2 million in the first three months of 1999. Year 2000 service revenues accounted for approximately 65% of consolidated revenues and 91% of U.S. revenues.
Revenues and profit contribution improved in the Strategia Europe Year 2000 services business unit such that it was marginally profitable in the first quarter of 1999, as compared to being in a loss position in 1998. Profit contribution from Year 2000 services also increased slightly in the U.S. in the first quarter, as compared to the first quarter of 1998.
Selling, general and administrative expenses decreased 10% to $1.8 million, or 28% of revenues in the first quarter of 1999. This compared to $2.0 million, or 37% of revenues, in the first three months of 1998.
Pretax income increased to $662 thousand in the three-month period ended March 31, 1999, from a pretax loss of $29 thousand in the comparable 1998 period. The French operations improved from a pretax loss of $408 thousand in the three months ended March 31, 1998 to a pretax profit of $91 thousand in the first three months of 1999, primarily due to the increased profitability from Year 2000 service revenues. Pretax profits in the U.S. improved to $571 thousand from $379 thousand in the prior year's first quarter, primarily due to reduced costs.
Net income for the three months ended March 31, 1999, was $605 thousand, or $.13 per share, compared to a net loss of $67 thousand, or $.01 per share, in the first three months of 1998.
The Company had stockholders' equity of $5.8 million and working capital of $3.0 million at March 31, 1999. Working capital was $1.5 million at December 31, 1998.
Richard W. Smith, President of Strategia Corporation, stated:
''We are very pleased with our financial results for the first quarter. We took certain actions in the fourth quarter of 1998 to improve our profitability, but first quarter results still exceeded our expectations. While we do not anticipate a continuance of this level of revenues and profitability throughout the remainder of the year, we are cautiously optimistic about the Company's ability to remain profitable in 1999.
''Profitability for the third and fourth quarters and, to a lesser extent, the second quarter depends upon our ability to contract new business. Although we have experienced a good level of sales activity thus far in the second quarter, the demand for Year 2000 services is very difficult to predict. Strategia will continue to pursue the sale of a number of Year 2000 services, such as embedded chip, readiness assessment and contingency planning, that could remain in demand for the rest of 1999. As demand for Year 2000 services declines, we need to replace Year 2000 service revenues with other IT service revenues. This is the most significant challenge facing the Company in the coming months.''
Several comments relating to earnings and revenues set forth above are forward looking statements. Management cautions that all statements as to future results of operations are necessarily subject to risks, uncertainties, and events that may be beyond the control of Strategia, and no assurance can be given that such results will be achieved. Potential risks and uncertainties include the ability to procure, properly price, retain, and successfully complete projects, the availability of technical personnel, changes in technology, and competition. Other risks and uncertainties are discussed under the heading ''Risk Factors'' in the Company's Form 10-KSB and under the heading ''Certain Factors That May Affect Future Results'' in the Company's form 10-KSB filed with the Securities and Exchange Commission.
Strategia Corporation
Summary of Consolidated Financial Results
For the Three Months Ended March 31, 1999
(Amounts in thousands, except per share amounts)
Three Months Ended
March 31
1999 1998
Revenues $ 6,421.9 $ 5,404.6
Operating income 742.9 61.8
Net income (loss) 605.0 (66.6)
Net income (loss) per share $ 0.13 $ (0.01)
Weighted average number of
common shares outstanding 4,667.7 4,667.7
Note: Basic and diluted amounts per share are based on net income
(loss), divided by the weighted average number of common
equivalent shares outstanding during the period. Basic and
diluted per share amounts are not materially different at
March 31, 1999 and 1998.
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Contact:
Murdock Capital Partners Corp.
Thomas M. Dean or Luis J. Mejia, 212/421-2545
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